The South Division of Bramble Company reported the following data for the current year.SalesVariable costsControllable fixed costsAverage operating assets1.2.Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division tosubmit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses ofaction.3.Return on Investment$2,900,000Increase sales by $300,000 with no change in the contribution margin percentage.Reduce variable costs by $160,000.Reduce average operating assets by 3.00%.1,943,000(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)Action 1600,0005,000,000Action 2Action 3(b) Using the ROI equation, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%)Return on investment%%1 %%

Variable costs are costs that vary with the change in the level of output whereas fixed costs are…

The South Division of Bramble Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2. 3. Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Return on Investment $2,900,000 1,943,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $160,000. Reduce average operating assets by 3.00%. Action 1 600,000 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%) Action 2 5,000,000 Action 3 (b) Using the ROI equation, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on investment % % I % %

The South Division of Bramble Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2. 3. Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Return on Investment $2,900,000 1,943,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $160,000. Reduce average operating assets by 3.00%. Action 1 600,000 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%) Action 2 5,000,000 Action 3 (b) Using the ROI equation, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on investment % % I % %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a. Compute ROI for Division A.b. Compute residual income for Division B.c. Division A could increase its profit by $40,000 by increasing its investment by $150,000. Computeits total residual income.d. Division A could increase its return on sales by one percentage point, while keeping the same totalsales and investment. Compute its ROI.e. Division B could reduce its investment so that its asset turnover increased by one time, whileholding total sales constant. Compute its ROI.
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a. Compute ROI for Division B.b. Compute residual income for Division A.c. Division B could increase its profit by $80,000 by increasing its investment by $300,000. Computeits total residual income. d. Division A could increase its return on sales by one percentage point, while keeping the same totalsales. Compute its ROI.e. Division A could increase its sales so that its asset turnover increased by one time, while holdingtotal assets constant. Compute its ROI.
For its three investment centers, Ayayai Company accumulates the following data: Sales Controllable margin Average operating assets $2,480,000 1,736,000 6,200,000 The return on investment 11 $4,960,000 2.480,000 9,920.000 Compute the return on investment (ROI) for each center. 25 % 111 $4,960,000 4,464,000 12.400.000 11 21.43 m 24 96
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A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ Company A 480,000 156,000 21 % 18 % Company B $ 740,000 GA GA $ 53,000 $ 69 18 % 54.000 % $ $ $ Company C 520,000 155,000 % 12 % 5,000
The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2. 3. Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Return on Investment $2,950,000 1,947,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $155,000. Reduce average operating assets by 4%. Action 1 595,000 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.) Action 2 5,000,000 Action 3 (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on investment do % % % %
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent and other amounts to whole dollars.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ A 470,000 160,000 15 % 16 % $ $ $ Company B 680,000 43,000 19 % 57,000 % C $ 560,000 $ 145,000 $ % 10 % 5,000
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Profit Margin, Investment Turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales $816,000 Cost of goods sold 367,200 Gross profit $448,800 Administrative expenses 285,600 Income from operations $163,200 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,360,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin 2 x % Investment turnover Rate of return on investment % b. If expenses could be reduced by $40,800 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer…
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Multiple Choice O The company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 12%. What is the financial advantage (disadvantage) of discontinuing Department B? O O O $(148,000) $(152,000) $(147,600) Total $ 800,000 320,000 $(127,600) 480,000 400,000 $ 80,000 Department A Department B $ 350,000 $ 450,000 120,000 200,000 230,000 250,000 260,000 140,000 $ 90,000 $ (10,000)